NOTE: Bill summaries included in this document are prepared by the staff of the South Carolina House of Representatives and are not the expression of the legislation's sponsor(s) or the House of Representatives. The summaries are strictly for the internal use and benefit of members of the House of Representatives and are not to be construed by a court of law as an expression of legislative intent.

The House of Representatives amended, approved, and sent to the Senate H.3006, the 2005 JOBS CREATION ACT. This bill establishes and provides for an income tax credit of up to 25% of an equity investment made in a qualifying business, not to exceed $100,000 per investor. The bill allows a five-year carry-forward for the credit, and provides that the total credit statewide may not exceed ten million dollars. The bill defines the three types of business which are eligible for equity funding under the bill as: 1) eligible small businesses with gross receipts of $2 million or less (businesses engaged in retail, professional services, banking, financial, and real estate services are not eligible); 2) a business which has received funding pursuant to the federal Small Business Innovation Research Program; and 3) a business with gross receipts of $2 million or less that is commercializing technology for one of the state's three research universities. The bill requires businesses to register with the Secretary of State in order for investors to receive the credit, and requires that businesses must renew their registration annually to remain qualified. The bill includes reinstatement provisions for businesses that fail to renew. The bill also provides that investors will forfeit the credit if: 1) within three years after the investment is made, the investor or other related person participates in the operation of a qualified business; 2) the registration of the qualified business is revoked because of false information on the application; 3) within one year after the investment is made, the taxpayer transfers any of the equity, near-equity, or seed capital received in the investment that qualified for the tax to another person or entity (except under certain circumstances). The bill provides that the Coordinating Council for Economic Development will allocate the credit, and it may annually reserve up to $2 million of the $10 million credit for investments in qualifying businesses which are engaged in hydrogen fuel cell research and development; Clemson University International Center for Automotive Research; technology incubators for the Medical University of South Carolina; and nanotechnology.

The bill also creates a CAPITAL ACCESS PROGRAM (CAP), to be established by the Business Development Corporation of South Carolina (BDC) with an initial appropriation of $2.5 million, to assist participating financial institutions making loans to small businesses located in the state that otherwise find it difficult to obtain regular bank financing. Under this program, a qualifying small business is defined as one with retail sales or annual revenue not to exceed $2 million; or wholesale sales less than $5 million; or a manufacturing business with no more than 50 employees. Under the program, the BDC will establish terms and conditions under which financial institutions will participate. The bill provides terms and conditions under which financial institutions may originate loans under the program. The bill provides that each tax incentive enacted in the bill shall be repealed for tax years beginning after five years from the date of enactment, unless a different time frame is provided in the bill. The bill provides that for purposes of income and license tax and sales and use tax, nexus will be determined without regard for whether the taxpayer owns or utilizes a distribution facility in South Carolina.

The bill also AMENDS THE MOTION PICTURE INCENTIVE ACT (The Act) including numerous technical changes as well as the following changes:

The Act broadened an existing state sales tax exemption for machinery and supplies used in filming. This bill extends that same exemption to local sales tax.

The Act created a 5% wage rebate based upon the wages paid to employees of motion picture production companies. This bill clarifies that employees of loan-out or personal service corporations qualify for the rebate.

The bill provides additional detail and guidance on how a motion picture production company obtains the 5% wage rebate.

The House amended, approved, and sent to the Senate H.3234. Currently, the State may issue General Obligation Bonds for AIR CARRIER HUB TERMINAL FACILITIES meeting certain criteria. These funds may be used for acquiring land, constructing, improving, and equipping facilities, and for purchasing equipment and machinery related to the facility. H.3234 expands the definition of "air carrier hub terminal facility" to also include (irrespective of the number of flights) facilities that will use two or more specially equipped planes that are used for the transportation of specialized cargo and subject to ad valorem property taxation or a fee in lieu of taxes in South Carolina. The bill also amends the statutory definition of an "air carrier" to mean a corporation licensed by the Federal Aviation Administration with a certificate of public convenience and necessity or an operating certificate under other applicable federal law or pertinent regulations which operates aircraft to or from an air carrier hub terminal facility. The Committee also added a provision that the term "air carrier hub terminal facility" includes an economic development project, as defined in the State General Obligation Economic Development Bond Act, that is functionally related to a facility satisfying one of the criteria included in the definition of an air carrier hub terminal facility. The Committee also amended the bill to provide that a request for the issuance of bonds must be accompanied by a binding contract with either an air carrier or the principal user of the air carrier hub terminal, to be financed with the issuance of the obligation. Currently, the contract may only be with an air carrier. The Committee also amended the bill to provide that if the Secretary of Commerce (the Secretary) recommends that the Budget and Control Board (the Board) consider approving the issuance of bonds, he shall forward his written approval and request to both the Joint Bond Review Committee (JBRC) and the Board, rather than only to the Board. The bill also requires that the Secretary's approval and request must be accompanied by a certificate establishing the maximum principal amount of the bonds requested to be authorized; a description of the infrastructure for which the bonds are to be issued; and a tentative time schedule for the time during which the sum requested is to be expended. The bill provides that following the receipt of the approval and request from the Secretary, and after approval by the JBRC, the Board may approve the issuance of the bonds.

The House and the Senate voted to override the Governor's veto on S.852 of 2004 pertaining to the inclusion of PAID HIGHER EDUCATION STUDENT WORK IN RETIREMENT SYSTEM CALCULATIONS. This legislation revises provisions pertaining to the South Carolina Retirement System and the South Carolina Police Officers Retirement System so as to include paid service rendered as an employee of a postsecondary public technical college or public junior college, or a public four-year or postgraduate institution of higher education, while the member was a student at that institution in certain member contribution requirements used for calculating unused annual leave and average final compensation.

The Education and Public Works Committee reported favorable with amendments on H.3010. As reported by the Committee, this bill establishes and provides for the CAROLINA PUBLIC CHARTER SCHOOL DISTRICT (the District), a public body with geographical boundaries the same as the boundaries of the State of South Carolina. The bill provides that the District must be governed by a board of trustees, whose office must be housed in and staffed by the Office of the Governor until the 2010-2011 school year, at which time it shall be transferred to the State Department of Education. District trustees would be appointed by the Governor (3); the Speaker of the House (3); the President Pro Tempore of the Senate (3); and the State Superintendent of Education (2).

Under the provisions of the bill, District trustees have the same powers, rights, and responsibilities with respect to charter schools as other school district boards of trustees of this State including but not limited to: exercising general supervision over public charter schools, granting charter status to qualifying applicants, and determining district policy. The bill requires applicants who wish to form a charter school to form a charter committee and to submit an application to the Charter School Advisory Committee and the school board of trustees from which the charter committee is seeking sponsorship. The Advisory Committee must determine within sixty days whether the application is in compliance, and an application that is in compliance must be forwarded to the school district from which the application is seeking sponsorship with a letter stating that the application is in compliance. The bill requires that this letter shall also include a recommendation from the Charter School Advisory Committee to approve or deny the charter. The letter must specify the reasons for this recommendation, and the recommendation is nonbinding on the school board of trustees. The bill includes provisions and procedures for local school boards of trustees which have information that an approved application by the Carolina Public Charter School District adversely affects the other students in its district, or that the approval of an application fails to meet the spirit and intent of the Charter Schools Act. In such instances, the local school board may appeal the granting of the charter to the State Board of Education. The bill provides that the State Board must, within forty-five days, affirm or reverse the application for action by the Carolina Public Charter School District. The bill provides that schools currently established as a private school who desire to convert to a charter school must dissolve and shall not be allowed to open as a charter school for a period of twelve months.

JUDICIARY

The full Judiciary Committee met this week to consider H.3011, a PROPOSED CONSTITUTIONAL AMENDMENT PERTAINING TO CERTAIN CONSTITUTIONAL OFFICERS. The Committee reported favorable with amendment to this joint resolution. Currently, the offices of Commissioner of Agriculture and Superintendent of Education are positions required by the State Constitution to be held by duly elected individuals. As passed by the full Committee, this joint resolution proposes to submit to the electors at the next general election whether or not these two offices should remain elected positions or rather be positions appointed by the Governor upon advice and consent of the General Assembly. The joint resolution further provides to submit to the voters at the next general election whether or not the State Board of Education should be abolished effective upon the State Superintendent of Education being appointed by the Governor.

LABOR, COMMERCE AND INDUSTRY

The full House Labor, Commerce and Industry Committee met on Tuesday, January 18, and reported out H.3026 favorable with amendment. This bill provides that MODIFICATIONS TO NATIONALLY RECOGNIZED BUILDING CODES promulgated according to requirements do not require readoption by the Building Codes Council for subsequent editions of the building codes, unless the amended section in the underlying code has substantively changed. Upon submission of a formal request, existing modifications may be reconsidered each time a new edition of the building code is considered for adoption by the Building Codes Council.

MEDICAL, MILITARY, PUBLIC AND MUNICIPAL AFFAIRS

The full committee did not meet this week.

WAYS AND MEANS

The Ways and Means Committee reported out six bills this week.

H.3150 was reported favorable with amendment. As reported by the Committee, this bill ESTABLISHES AND PROVIDES FOR THE SOUTH CAROLINA SUNSET COMMISSION (THE COMMISSION) AND FOR A SEPARATE SUNSET REVIEW DIVISION OF THE LEGISLATIVE AUDIT COUNCIL (THE DIVISION). The Division is created to conduct sunset reviews of certain state agency and department programs, and to report its findings based on the review criteria delineated in the bill. The Division is to conduct these reviews to determine whether the programs have outlived their usefulness or must be changed to address the needs and priorities of South Carolinians and the General Assembly. After the report is published, the bill requires the Commission to conduct a public hearing on the agency and its programs. The report must be filed with the House and Senate by January 15 of each year, and reauthorization of an agency or program must be accomplished in a special provision in the annual general appropriations act. The existence of any state agency or program may be reauthorized by the General Assembly for periods not to exceed twelve years. Any agency or program not reauthorized is terminated. The bill authorizes the General Assembly, if it determines the circumstances warrant it and by concurrent resolution, to advance the termination date and sunset review scheduled for an agency.

The Committee reported favorable on H.3304. This bill PROVIDES REQUIREMENTS, PROCEDURES, AND CIVIL AND CRIMINAL PENALTIES INTENDED TO ENHANCE THE ENFORCEMENT OF PROVISIONS OF THE TOBACCO ESCROW FUND ACT AND TO SAFEGUARD THE MASTER SETTLEMENT AGREEMENT.

The bill requires tobacco product manufacturers whose cigarettes are sold in this state to deliver an annual certification to the Attorney General certifying that the manufacturer is a participating manufacturer or is in full compliance with statutory provisions requiring participation in the Master Settlement Agreement or depositing funds in a qualified escrow fund. The bill delineates information which must be provided in the certification by participating manufacturers and by nonparticipating manufacturers.

The bill requires that the Attorney General make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications and all brand families that are listed in the certifications, with certain exceptions provided for specified nonparticipating manufacturers. The bill includes conditions and procedures for removing nonparticipating manufacturers from the directory.

The bill provides that it is unlawful to: affix a stamp to any container of cigarettes of a manufacturer or brand family not included in the directory if such a stamp is required by law or; sell, offer, acquire, hold, own, possess, transport, import, or cause to be imported for sale in this state cigarettes of a manufacturer or brand family not included in the directory. The bill provides that persons who violate this prohibition are engaging in an unfair and deceptive trade practice. The bill provides that persons who violate this prohibition with knowledge of the prohibition are guilty of a misdemeanor punishable by a fine of up to one thousand dollars, imprisonment for one year, or both. The bill authorizes the Attorney General to revoke or suspend the license of a cigarette distributor who violates these provisions and authorizes the Attorney General to impose a civil penalty for each violation in an amount up to the greater of five times the retail value of the cigarettes or five thousand dollars.

The bill includes requirements for certain nonresident or foreign nonparticipating manufacturers to have an agent in this state for the service of process regarding actions or proceedings arising from enforcement of the provisions of the bill. A nonparticipating manufacturer who does not have an agent is deemed to have appointed the Secretary of State as the agent.

The bill includes requirements for cigarette distributors to regularly submit information the Attorney General requires to facilitate compliance with the provisions of the bill.

The bill provides for seizure, forfeiture and destruction of cigarettes declared to be contraband. The bill provides that it is a felony for a cigarette manufacturer, importer, distributor, or retailer to sell or possess counterfeit cigarettes, and provides penalties including fines and imprisonment for first and subsequent violations of this provision.

The Committee reported favorable on H.3086, the S.M.A.R.T. (STREAMLINED MANAGEMENT AND ACCOUNTING RESOURCES FOR TEACHING) FUNDING IN EDUCATION ACT. This bill establishes a fund management and accounting program that consolidates all program funding to the state's school districts and special schools for enhanced flexibility in their operations of grades K-12. The bill outlines six general categories in which funds may be spent: quality teaching; instruction; technical assistance; operations, infrastructure, and safety; workforce education; and special needs. The bill allows for transfer of monies between programs within these categories, and provides for some flexibility in distribution of funding across the general categories. The bill provides that the General Assembly and the Governor, beginning with the annual general appropriations act for 2005-2006, shall adjust the format of the general appropriations act to reflect the categories established in the bill.

The Committee reported favorable with amendment on H.3009, an ADMINISTRATIVE RESTRUCTURING BILL. As reported by the Committee, this bill establishes the Department of Administration as an Executive Branch department headed by a director appointed by the Governor. Various offices, divisions, or components of the State Budget and Control Board (the Board), Office of the Governor, and other agencies are transferred to and incorporated into the Department.

The bill also establishes and provides for the Division of the Office of the State Chief Information Officer, a Joint Information Technology Review Committee, an Information Technology Business Case Review Panel, an Information Technology Architecture Oversight Panel, and an Information Technology Innovation Fund to provide leadership, direction, incentives, and funding for the use of information technology within South Carolina government. As reported by the Committee, these provisions do not apply to the State Ports Authority.

The bill creates and provides for the Office of the State Inspector General as a division within the Department of Administration to be headed by the State Inspector General, appointed by the Governor. This office and position are established to, among other things, find and eradicate fraud, waste, misconduct, and abuse within executive branch government agencies; keep heads of executive agencies and the Governor informed about such findings; and provide leadership and control over satellite Inspector General offices in designated executive agencies which would report to and operate under the Office of the State Inspector General.

The bill transfers into the Department of Administration, the Facilities Management, Business Operations, and Fleet Management Programs of the Division of General Services of the Budget and Control Board. The bill provides that the Budget and Control Board contains an additional division, known as the State House, Legislative, and Judicial Facilities Operations Division, responsible for the operations and management of the State House, Blatt Office Building, Gressette Office Building, Supreme Court Building, Calhoun Office Building, and Capitol Complex grounds.

The bill provides that the Department of Administration must ensure that a specified number of parking spaces are available in the garage below the Capitol Complex, in proximity to the buildings used by the legislative, judicial, and executive branches.

The bill moves the Division on Aging from the Governor's Office to the Lieutenant Governor's Office and provides that the Division on Aging, rather than the Department of Mental Health, is responsible for Veterans Administration nursing home oversight.

The Committee reported favorable with amendment on H.3152, a bill which AMENDS THE MOTION PICTURE INCENTIVE ACT. Revisions include, but are not limited to: extending the exemption from sales and use tax to include an exemption from local, as well as state sales and use taxes; allowing up to seven percent of the general fund portion of admissions tax collected and funded to the State Film Commission to be used by the Department of Commerce exclusively for marketing and special events; and deleting a rebate to a motion picture company for sales tax paid on accommodations. The bill also authorizes the Department of Commerce to carry-forward their portion of the admissions tax for rebates and grants.

The Committee reported favorable with amendment on H.3007. As reported by the Committee, beginning with the 2006 taxable year, this bill REDUCES THE SEVEN PERCENT TOP MARGINAL RATE OF STATE INDIVIDUAL INCOME TAX in equal annual increments of .225 percent until a permanent top marginal rate of 4.75 percent is attained. The bill further provides that beginning with taxable year 2007, such reductions are postponed if general fund revenue growth for the applicable fiscal year is less than two percent. The bill also strikes a current provision which limits adjustment of income brackets to one half the adjustment determined by the IRS.

H.3319ATTENDANCE AT GIFTED ARTS PROGRAMS Rep. Limehouse
This bill provides that a student zoned to attend a public school may audition and, if accepted, attend the public school's extracurricular gifted arts program. The bill further provides that funds must be allocated to extracurricular gifted arts programs based on the number of students zoned to attend a public school.

H.3320NAMING OF STATE ROADWAYS Rep. Wilkins
This bill prohibits naming a state road, highway, or interstate, or any portion thereof, for a person who is living. The provisions of the bill take effect upon approval of the Governor and apply to such roadways not yet officially named for a living person as of the bill's effective date.

H.3335OFFICIAL STATE HANDCRAFT Rep. Limehouse
This bill designates the sweet grass basket as the official state handcraft.

H.3340ENERGY SAVINGS PLANS FOR INSTITUTIONS OF HIGHER LEARNING Rep. Scott
This joint resolution requires public institutions of higher learning to develop energy savings plans which over a five year period will realize savings more than the cost of the funds expended to make the improvements.

JUDICIARY

H.3313 ILL-TREATMENT OF ANIMALS Rep. R. Brown
S.C. Code Ann. §47-1-40 prohibits the ill-treatment of certain animals as well as provides penalties for violations. Current law provides an exception for fowl. Under this bill, the section would not apply to meat producing fowl, commercial egg laying fowl, or fowl that is indigenous to the State used for game or sport.

H.3325AGREEMENT BETWEEN AN IMPORTER AND A FOREIGN BREWER Rep. Harrison
This bill pertains to beer wholesaler franchise. Specifically, the bill pertains to an agreement between an importer and a foreign brewer; the bill clarifies that a foreign brewer includes its successor or assignee.

H.3326 DRAWING AND COMPOSING JURIES IN MUNICIPAL COURT Rep. Harrison
This bill relates to drawing and composing juries in Municipal Court. The bill provides when a jury is drawn for a single trial that the parties shall exercise peremptory challenges before trial and only persons selected may be summoned for trial.

H.3328SEX OFFENDER REGISTRY Rep. Brady
This bill pertains to the operation of the sex offender registry by the State Law Enforcement Division (SLED), so as to provide that SLED shall include and cross-reference alias names in the registry.

The bill provides that a sex offender whose name is contained on the sex offender registry, and who has been granted a pardon, must remain on the registry and must continue to register annually.

The bill provides that an offender's photograph must be provided to SLED before the offender is released from prison.

Current law requires a convicted sex offender to register in the county where the offender resides. The bill requires that the offender must also register with the sheriff of the county or counties where the offender owns real property. The bill also provides that a registered sex offender who acquires real property within this State must provide notice of the address to the sheriff in the county where the real property is located. The bill further provides that a person who is required to register as a sex offender who moves to this State, acquires real property in this State, and is not under the jurisdiction of certain correctional agencies, must register within 10 days of acquiring property within this State.

Among other things, the bill provides that the amount of noneconomic damages awarded in a medical malpractice action against a health care provider must not exceed $250,000 per plaintiff. The bill defines 'noneconomic damages' as damages to compensate for pain, suffering, inconvenience, physical impairment, disfigurement, and other nonpecuniary, compensatory damage; the term noneconomic damages does not include punitive damages.

The bill authorizes the periodic payment of future damages in lieu of a lump-sum payment when the award equals or exceeds $50,000 in future damages. The term 'future damages' includes compensatory damages for future medical treatment, care, or custody; loss of future earnings; loss of bodily function in the future; or future pain and suffering of the judgment creditor.

The bill also establishes maximum limits for attorney's fees that are to be paid on a contingency fee.

LABOR, COMMERCE AND INDUSTRY

H.3327EMPLOYMENT SECURITY LAW REVISIONS Rep. Cato
This bill provides that a worker is ineligible for benefits under the Employment Security Law if there is specified evidence of illegal drug use or if the worker refuses to comply with required drug tests. An exception to this ineligibility is provided for a worker's voluntary admissions of illegal drug use in instances where the employer has a policy that protects an employee from immediate termination when making such voluntary admissions. The legislation revises provisions for the assignment of the employment benefit record of an employment unit in a business acquisition or reorganization with continuity of control for purposes of the South Carolina Employment Security Law, so as to require a violation to be knowing rather than willful. The legislation requires the South Carolina Employment Security Commission to establish procedures to identify the transfer of a business.

H.3366WORKERS' COMPENSATION FOR LAW ENFORCEMENT OFFICERS' CARDIAC-RELATED INCIDENTS Rep. Bingham
This bill revises occupational diseases provisions under the South Carolina Workers' Compensation Law, so as to provide that a cardiac-related incident resulting in impairment or injury to a law enforcement officer resulting in total or partial disability, or death, is presumed to have arisen out of and in the course of employment under certain conditions.

MEDICAL, MILITARY, PUBLIC AND MUNICIPAL AFFAIRS

H.3316 CONTINUING EDUCATION CREDITS FOR COSMETOLOGISTS Rep. Young
This bill requires that a member of the State Board of Cosmetology must be present at all continuing education courses in this State for cosmetologists approved by the Board.

H.3317 CONTINUING EDUCATION CREDITS FOR COSMETOLOGISTS Rep. Young
Under this bill, a person licensed as a cosmetologist in this State for a continuous period of 20 years or more is exempt from any continuing education requirements for licensure.

H.3318CONTINUING EDUCATION CREDITS FOR COSMETOLOGISTS Rep. Young
This bill provides that continuing education courses taken out of state by a cosmetologist licensed in South Carolina must count toward the cosmetologist's annual continuing education requirements in a manner provided by the State Board of Cosmetology.

H.3329LIMIT ON APPROPRIATIONS Rep. G.R. Smith
This bill imposes a new limit on state appropriations effective for the fiscal year beginning July 1, 2007. The limitation would be the lesser of 106% of base-year appropriations, or base-year appropriations with an increase based on the state's population growth and on increases in the consumer price index.

The bill establishes a separate and distinct fund in the State Treasury entitled the Spending Limit Reserve Fund, and requires that all general fund revenues accumulated in a fiscal year in excess of the appropriation limit must be credited to this fund. Revenues in this fund may be appropriated (as provided in the bill) by the General Assembly in the year following the close of the applicable fiscal year. The bill provides that if the balance in the general fund reserve is less than the required balance, all amounts in the Spending Limit Reserve Fund must be appropriated to the general fund, up to the total necessary to replenish the general fund reserve, and this amount does not replace or supplant the minimum replenishment amount otherwise required to be made to the general fund reserve. The bill provides that to the extent these concurrent replenishments of the general reserve fund exceed the amount necessary for its full funding, the general reserve fund as provided in the South Carolina Constitution, that fund is deemed to require an annual minimum balance equal to this increased amount not to exceed a total balance equal to four percent of general fund revenue in the latest completed fiscal year. After appropriation of amounts required pursuant to this provision, any remaining balance may be appropriated for or used to offset revenue reductions for infrastructure improvements, temporary tax reductions, school buildings, school buses, and state expenses incurred as a result of natural or other disasters declared by the President of the United States.

The provisions of the bill take effect upon ratification of relevant amendments to the South Carolina Constitution.

H.3338UNBORN CHILDREN'S MONUMENT ON STATEHOUSE GROUNDS Rep. Davenport
This joint resolution creates and provides for the South Carolina Unborn Children's Monument Commission, charged to direct that a monument be erected on the State House grounds as a memorial to South Carolina children whose lives ended before their birth. The bill authorizes the Commission to raise private funds for this monument, and directs the staff of the State Budget and Control Board to assist the Commission with its financial recordkeeping.

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